Taxman targets undeclared rental income

A third of of all home rentals in the Balearic Islands do not declare their income to the government, say Gestha (the Spanish tax department). According to their figures, there are 17,000 properties which are being used for holiday rentals in the peak tourist season that are not registered with the Balearic tax office. This equates to 36.5% of all rental apartments and villas.

Despite this high figure of tax-avoidance, the Balearics is actually one of the most compliant regions in Spain in terms of owners registering their rental income. The Gestha report estimates that there are more than a million properties in Spain that are not registered with the authorities, which is more than half of all rental properties. Catalonia has the highest rate of tax avoidance, with owners withholding 855 million euros that rightly belong to the government.

The Balearic government ran a public awareness campaign on the issue in 2008 which led to nearly 3,500 new owners registering their properties with the authorities. Current estimates put the figure of undeclared earnings from Balearic holiday rentals in the region of 50 million euros.

For information on renting your home in Mallorca, read our article on The Legalities of Private Holiday Rentals in Mallorca.